Rapid pace of change in fintech brings risks

Risks include fraud and cybersecurity issues, as well as the implications of power outages. However, New Zealand ranks way down the list for cyber-heists, at number 18 out of 19 for “most attacked regions” in the Asia Pacific.

But New Zealanders are at risk of service disruptions with new payment technologies, the RBNZ warns.

“A particular source of risk is the concentration of outsourcing to third-party infrastructure suppliers.

“A major EFTPOS outage, for example, would mean people and businesses cannot transact, even though they are connecting through a range of banks.”

RBNZ develops new oversight functions

The Reserve Bank is now developing new oversight regulations for financial market infrastructures, to establish any crisis management power around payment systems. For example, the Reserve Bank has been consulting with the industry regarding the actions RBNZ could take if there is a point-of-sale switch outage, and the impact of such an outage.

“The challenge for the Reserve Bank, and for all of us, is to understand the evolving financial services landscape, including its opportunities and vulnerabilities,” Mr Spencer says.

“As we move forward in this rapidly changing environment, it serves all our interests to first ensure the safety of the system. This is the foundation for achieving innovation and growth in the industry.”

The Banking Ombudsman has provided some tips on consumer protection around payment systems, including how to protect against fraud when paying with a smartphone.